European Business: From your experience while researching and writing the book and writing it, what was the most significant change in a company’s development you observed?
Arthur Yeung: The most significant development is the use of ecosystem as both a strategy for business competitiveness and a way of organizing for agility, innovation, and customer obsession.
European Business: How and when do you start to reorganize and reinvent the company?
Arthur Yeung: A company starts to reinvent its organization when the top management develops a shared view about the future – how to win and compete in an increasingly fast-changing and unpredictable environment. A shared conviction that a new kind of environment (often driven by breakthroughs in technological development, changes in customer behaviours, and new competition) calls for an evolved organizational species that is more agile, innovative, and customer-obsessed in order to survive and thrive.
Organizational reinvention does not occur only in high-tech firms where the business environment is fast changing but also increasingly among firms in traditional industries like retail, banking, manufacturing, mobility, education, and healthcare as companies in these industries are being transformed by digital technologies.
"Many companies are too much internally focused, spending tons of energy and time on internal reviews, approvals, and meetings rather than looking intensely at future technological trends." Arthur Yeung
European Business: In your book, you and co-author Dave Ulrich developed the MOE (market-oriented ecosystem). What is it about?
Arthur Yeung: It is a new organizational form with two key features: Firstly, how it organizes structurally as an ecosystem rather than hierarchy and secondly, how it operates with strong market focus in identifying and creating new market opportunities.
Instead of being organized by divisions where a chain of command allocates resources, the MOE organization has a platform of resources (money, people, technology, data) that is dedicated to supporting customer-facing teams to capture market opportunities. Each market opportunity is assigned an independent team (or cell) where employees anticipate customer requirements and move quickly to respond to them. Historically, this organizational logic might have been seen as holding companies—with a hub and spokes. But the MOE connects the independent teams and platforms into an ecosystem to share vital information, resources, and expertise to fuel customer obsession, innovation, and agility. The MOE is a novel way of designing organizations to be both small (agility through independent teams) and large (economic scale through platforms), innovative (new market insights discovered in market-oriented teams) and learning (sharing information across teams and platforms).
European Business: What do think about new forms of organization like an agile organization?
Arthur Yeung: Over the last two decades, there are a lot of new organizational models being advocated like agile organization, holacracy, platform, boundaryless, ameba, etc. We have conducted extensive literature review to identify the common organizational principles and logic of these organization forms, in addition to in-depth cases of eight iconic companies in the US, China, and Europe.
Agility is one of the key capabilities that MOE tries to create through the combination of shared platforms at the back end to provide resources and highly autonomous teams at the front end to respond to customer wants and unmet needs. In addition, MOE is also organized to foster innovation and customer obsession.
European Business: What is the organizational form of the future?
Arthur Yeung: We believe the future organization will evolve in two directions: Firstly, compete from outside in rather than inside out. Many companies are too much internally focused, spending tons of energy and time in internal reviews, approvals, and meetings rather than looking intensely at future technological trends, unmet customer needs, and demographic changes. Secondly, compete with ecosystem rather than by company itself. For instance, companies like Tencent or Alibaba have invested in hundreds of companies to enrich their ecosystems by complementing more products/services, technological know-how, and channel access to customers. As mentioned by Pony Ma, Chairman and CEO of Tencent, “half of Tencent now lies in the hands of our partners.” Ecosystem partners magnify the competitive capabilities of a company.
Interview: Vera Gaidies | photos: Harvard Business Review Press